Auto Insurance Rates Fall For Many

Much to the relief of consumers, auto insurance rates have come down over the past year. In 2004, rates dropped an average 10.6 per cent and continued to decrease in the second quarter of this year by about 1.62 per cent. Reasons for the decline in one jurisdiction, Ontario, include:

More Competitive Marketplace–Recent high-profile advertising by the insurance industry indicates a positive environment for insurers. The result is more choice for drivers looking for the best deal on auto insurance. And there’s more good news: The provincial government has introduced new measures to protect consumers who are shopping for auto insurance. Some highlights:

Excluded Driver Endorsement–All insurance companies must now offer written endorsements that permit vehicle owners to exclude specific drivers from their policies. One example is a teenage child who does not use the vehicles covered, even if he or she holds a valid driver’s licence. Under the Insurance Act, offering an excluded driver endorsement is mandatory. The endorsement wording has been strengthened with warnings and notifications about coverage limitations and other consequences if the excluded driver operates the insured vehicle.

NSF Cheque Protection–In June, a new requirement came into effect prohibiting insurers from cancelling an auto insurance policy if a car owner inadvertently writes a cheque with insufficient funds to pay a premium. The notice period for cancellation due to an NSF cheque has been extended from 15 to 30 days if the notice is sent by registered mail, and from 5 to 10 days if it is delivered in person. These measures will protect consumers who write two inadvertent NSF cheques during the term of a policy. However, if a third NSF cheque is issued, insurers will be permitted to terminate the policy.

Lifestyle Factors–Using credit scoring and other economic and “lifestyle” factors when setting the rates for auto insurance coverage is now banned. Some auto insurers had proposed considering factors relating to social or economic status before agreeing to issue a policy. This practice would unfairly link the issuing and pricing of auto insurance to lifestyle factors and not to the risks associated with driving a car. The prohibited criteria include employment stability, level of income, credit history, credit rating, holding a credit card, owning a home (or residence history), bankruptcy, and a person’s net worth.

Convicted Paralegals–The Insurance Act has been changed so that Statutory Accident Benefits (SABS) representatives, also known as paralegals, who have been convicted under the Criminal Code are banned from representing accident victims in the auto insurance dispute resolution system. These paralegals must be granted a pardon before they can practise again.

Further information is available from the Financial Services Commission of Ontario (FSCO) Auto Insurance website at: www.autoinsurance.gov.on.ca. FSCO regulates auto insurance and is an arm’s-length agency of the Ontario Ministry of Finance.